East African Development Bank (EADB) is embroiled in a loan tussle with Jubilee Party Secretary-General Raphael Tuju amounting to Ksh1.5 billion.
The loan was advanced to Tuju’s Dari Limited for the construction of Ksh100 million two-storey, flat-roofed bungalows sitting on a 20-acre forested land dubbed Entim Sidai and purchase of a 94-year-old bungalow built by a Scottish missionary, Dr Albert Patterson, which currently operates as a high-end restaurant.
Construction of the same fell behind schedule prompting a default. On Friday last week, the High Court blocked EADB from auctioning Tuju’s Karen property to settle the loan.
However, it now emerged that there could be more than the loan, with fingers pointed at the Bank’s management.
Reliable sources intimate that there are governance issues with the EADB which has been steeped in several controversies that point either to ineptitude, blackmail by bank staff who sometimes have been accused of unethical practices like demanding shares from projects financed by the bank in return for favourable terms or more money.
Stakeholders say that the supervision of the bank is very weak, with the board and the council of the bank composed of political types, that is the Ministers and PSs of Finance from the East African Countries.
The governing council is comprised of Kenya’s acting Treasury CS Ukur Yattani, Uganda’s Matia Kasaija, Tanzania’s Philip Mpando and Rwanda’s Ndagijimana Uziel.
The Board of Directors is comprised of Uganda’s Finance PS Keith Muhakanizi, J Tumisiime from Uganda, Kenya’s Treasury PS Dr Julius Muia, Francis Karuiru from Kenya, Rwanda’s Finance PS Caleb Rwamuganza, Faustine Mbundu from Rwanda, Tanzania’s Finance PS Doto James and Mrs Simba also from Tanzania.
According to the so far filed Court papers, Dari/Tuju says his Karen project has been sabotaged by EADB refusing to disburse the approved total project amount and also maliciously blocking other banks or equity investors from coming in.
EADB was so quick on December 23, 2019 to appoint receiver managers George Weru and Muniu Thoithi to prepare for the sale of the property, a move that was blocked by the court on the following day.
Through such tactics, investors and borrowers have been avoiding EADB, leading to a series of loss-making. For instance, in 2015 and 2016, the bank’s director general Vivienne Yeda Apopo was accused of doctoring books to cover losses.
Other projects that suffered the same fate as Tuju’s Dari Limited include Quality Health Ltd of Tanzania where funds were disbursed to purposes other than those approved, Kwale International Sugar Company where an agreement was signed for Ksh2 billion, but the bank declined to release the funds and introduced new conditions to the agreement.
Also, in the Infinity Industrial Park project in Kenya, USD 10 million (Ksh1 billion) was approved and Offer Letter executed but disbursement declined after new conditions were introduced.
For Kololo Gardens in Kampala Uganda, USD 4 million (Ksh400 million)was approved for a company owned by the family of a Board member.
Proprietors of Hill Park Hotel were not lucky after the bank approved for Hotel expansion but disbursements were withheld with new conditions introduced forcing them to withdraw collateral.
Next, this blog will be telling you about the rot and how the director general has reigned with impunity, bringing the bank to its knees and using unethical means to keep the bank afloat.